Kingsbeer v Okey

[2018] NZHC 3309

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE

CIV-2013-454-458

[2018] NZHC 3309

BETWEEN

PAULINE ANNE KINGSBEER AND

BERNADETTE PLAW AS TRUSTEES OF THE PAK TRUST

Applicants

AND

RONALD GORDON OKEY

First Respondent

AND

MCKENZIE MCPHAIL CORPORATE TRUSTEES LIMITED

Second Respondent

Hearing:

10 December 2018

Counsel:

R J B Fowler QC for the Applicants

J K Mahuta-Coyle for the Respondents

Judgment:

14 December 2018

JUDGMENT OF COOKE J

[1]    The present matters before the Court involve a continuation of disputes between the applicants and the respondents that have already proceeded before this Court and the Court of Appeal. The proceedings concern a private road over the applicants’ property in Palmerston North that is used by both the applicants and the respondents. The respondents use the road under an easement. The applicants now apply for two formal orders that are consequential upon the decision of the Court of Appeal:

(a)directing the respondents to pay a particular sum for the upgrade of the road, with an associated “unless” order that the respondents’ equitable easement will lapse if the sum is not paid; and

KINGSBEER v OKEY [2018] NZHC 3309 [14 December 2018]

(b)settling costs in relation for the initial High Court proceedings, in circumstances where the orders made by the Court were overturned on appeal by the Court of Appeal.

Background

[2]    For a number of years the respondents have benefitted from a roading easement over the applicants’ land. In December 2013, the applicants bought proceedings by way of statement of claim seeking orders that the easement be extinguished as a consequence of the respondents’ more extensive use of the road by heavier vehicles, or alternatively that the respondents pay the cost of upgrading the road to meet the standards required for private roading with that kind of vehicular use. The respondents opposed both orders, although prior to the trial they made an offer to pay 50 per cent of the costs of upgrading the road.

[3]    By judgment dated 1 February 2017 this Court held that the easement was invalid as a consequence of s 348(1) of the Local Government Act 1974.1 This provision requires local authorities to give permission before private roads are created, or rights of way granted, within their territories. The respondents appealed to the Court of Appeal, and by judgment dated 21 December 2017 the Court allowed the appeal.2 It held that the respondents had an equitable easement which was not overridden by s 348, and the easement was sufficiently broad in nature to allow an increase in the traffic by heavier vehicles without resulting in a change in circumstances sufficient for the Court to intervene under s 317 of the Property Law Act 2007. The Court nevertheless recognised that an upgrade was required, and exercised the jurisdiction under s 313 of the Property Law Act to hold that the respondents meet 75 per cent of the costs of upgrade, and the applicants 25 per cent.

[4]    It is now approximately a year since the Court of Appeal decision, and the upgrading of the road has not taken place. Affidavits have been filed by the parties describing the disputes that have emerged since the judgment. The applicants contend that the respondents are effectively avoiding implementation of the upgrade

1      Kingsbeer v Okey [2017] NZHC 57.

2      Okey v Kingsbeer [2017] NZCA 625.

contemplated by the Court of Appeal decision, which they say justifies the present application. The respondents deny this and have identified a number of issues in relation to proposals the applicants have made for upgrading the road.

[5]    I do not intend to traverse the evidence that has been filed in detail given the conclusions that I have reached on the appropriate disposition of the interlocutory application before the Court, although the views that I have formed are based on that affidavit material.

Jurisdiction

[6]    Mr Mahuta-Coyle, for the respondents, argued that the Court has no jurisdiction to deal with the interlocutory application. This is on the basis that the Court is functus officio. The High Court reached its conclusions and delivered a judgment, which was appealed to the Court of Appeal, and the Court of Appeal allowed the appeal and issued a judgment in substitution for the High Court judgment. It expressly did not remit any matters to the High Court.3 Thus he argued that the present proceedings have been finally determined.

[7]    On the face of it, this submission seems unanswerable. Mr Fowler QC, for the applicants, nevertheless contended that the orders that he was seeking would not alter or add to the judgment of the Court of Appeal, and were appropriately advanced as further orders to give effect to the Court of Appeal decision. In the alternative, he contended that the Court should exercise the power under r 1.5(3) of the High Court Rules 2016, which provides:

(3) The court must not wholly set aside any proceeding or the originating process by which the proceeding was begun on the ground that the proceeding was required by the rules to be begun by an originating process other than the one employed.

[8]    I see no merit in Mr Fowler’s first argument. What the applicants are seeking are orders supplementary to those actually made by the Court of Appeal. The present proceedings have been finally determined, subject only to costs. The Court has no jurisdiction in this proceeding to supplement what the Court of Appeal has done, or

3      Okey v Kingsbeer, above n 2, at [59].

engage in what is effectively enforcement of the Court of Appeal judgment. The Court of Appeal judgment exists, for better or for worse, in the terms that it was issued.4 The applicants effectively seek orders directing that particular sums of money be paid within particular times so that the upgrading of the roading can take place. Such orders could potentially have been made by the Court of Appeal, but were not.

[9]    I see greater force in the reliance on r 1.5(3). For the reasons outlined below there does appear to be a further proceeding the applicants could bring. But I accept Mr Mahuta-Coyle’s submission that it is not appropriate, at this stage, to make findings adverse to the respondents in the absence of a clearly formulated application under a particular rule or provision.

[10]   Having said that, it is clear that the parties need guidance in order to bring their disputes to an end. Moreover, in addressing the jurisdictional question, I see no difficulty in the Court identifying what the appropriate jurisdictional path is for the kind of orders the applicants seek, and the relevant considerations that would apply to such an application. This can involve identifying what the parties should now be doing to implement the Court of Appeal judgment, and the steps that can be taken if one or other of them fail to act in accordance with that judgment. This should give the parties a clear pathway forward for resolving their disputes.

Further application

[11]   The essence of the applicants’ contention is that the respondents are dragging the chain, and avoiding the outcome the Court of Appeal intended. If it was established that the respondents were not acting in accordance with the Court of Appeal judgment, then it seems to me that the applicants could make a further application under ss 313 or 317 of the Property Law Act for the Court to exercise is jurisdiction to modify or extinguish the easement. The Court of Appeal noted that the courts have traditionally taken a conservative approach towards the exercise of discretion under s 317.5 But the Court could order that any increased costs caused by delay be borne by the respondents, or even order that the easement be extinguished altogether, if satisfied

4      See Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94; [2013] 1 NZLR 804 at [28].

5      Okey v Kingsbeer, above n 2, at [52].

that the respondents were not cooperating to implement the outcome of the Court of Appeal judgment. The same would be true if it were alleged that the applicants were not acting consistently with the judgment. Dismissing the present interlocutory application is without prejudice to the ability to bring such an application.6

[12]   I accordingly explored with counsel what a reasonable way forward for the parties was in light of the affidavit evidence that has been filed, and the disputes between them that have been identified. The following process emerged as a consequence.

(a)That the upgrade to the road will proceed.

(b)That the parties jointly instruct a project manager, the identity of which is either to be agreed, and if not agreed is to be appointed by the President of the Institution of Professional Engineers New Zealand (now known as Engineering New Zealand).

(c)That the costs of the project manager shall be met by the parties in the same proportions as their liability for the upgrading works, as determined by the Court of Appeal.

(d)The project manager shall have the authority to determine the remaining issues between the parties concerning the upgrading, including:

(i)the process to be followed to appoint the relevant contractors, and the price to be paid for the works (which may or may not include a tender process);

(ii)the timeframe for completion of the works;

6      I note that such further proceedings might better be brought in an originating application in accordance with r 19.5 of the High Court Rules 2016, rather than as an ordinary proceeding as was initially done here.

(iii)the process to be followed for the making of payments, including interim payments to progress the project; and

(iv)ensuring that the upgrade works meet the requirements of the local authority.

[13]   Mr Fowler also suggested that a clear timeframe was important. I agree with that. It seems to me that the instruction of a project manager should be completed by February 2019.

[14]   Counsel for the applicants and respondents both agreed that this kind of process was a reasonable one. If either of the parties departed from that procedure, or a process that was equivalent to that procedure, this could form the basis for contending in a fresh proceeding that there should be an alteration to the conditions associated with the easement under s 313, or even that it be extinguished in accordance with s 317.

Additional matters

[15]   There are two other issues appropriately addressed. First, an issue has been raised in relation to a drain that is apparently associated with the existing road. Questions have been raised about: the need for, and cost of maintaining, the drain; whether there will be increased maintenance and repair costs as a consequence of the upgraded road; and whether the act of upgrading may cause damage to the drain. I do not have sufficient material before me to form any views about those issues, and neither do I think it appropriate to indicate that all such issues should be resolved by the project manager. It may be highly desirable that the parties either agree, or seek the project manager’s views on such points if they are not in agreement. I observe that it seems that the maintenance of the drain is a joint responsibility (50/50) as a starting point. But I say no more than that.

[16]   Second, the respondents have observed that the Court of Appeal indicated that the upgrade of the road was a right of the respondents.7 But that was in the context of the Court finding that the respondents had an equitable right, including a right to use

7      Okey v Kingsbeer, above n 2, at [61].

heavier vehicles and to upgrade the road for that purpose. It was not a finding that the upgrading of the road was at the respondents option. Whilst no order was made under s 313(1)(c), it appears clear that the Court of Appeal contemplated that the road would be upgraded. That is because the upgrading is necessary to meet local authority requirements for private roading serving the type of vehicles the respondents are using. So it is necessary if the respondents want to continue to use the easement in this way. Equally the applicants need the upgrade to meet the terms of a resource consent granted for particular buildings. Thus, the roading upgrade is required if both parties are to properly exercise their legal rights. If the upgrade does not take place promptly, then further processes can be initiated.

[17]   Nevertheless, for the above reasons I dismiss the applicants’ interlocutory application. Dismissing it is without prejudice to the right of either party to bring further applications as contemplated above.

Costs

[18]   Following the initial success of the applicants before the High Court, the High Court awarded them costs. The respondents were, however, successful on appeal and were awarded costs on that appeal.8

[19]   Unfortunately, the Court of Appeal overlooked dealing with costs in the High Court. That was drawn to the attention of the Court of Appeal, and in a minute dated 27 March 2018, Kós P indicated how this Court should proceed:

The practice of this Court in relation to High Court costs is to reserve those for redetermination in that Court. Although not expressed, it may be taken however that was the intended disposition of this Court in this appeal. If need be the judgment may be recalled to state that further conclusion. But we imagine this matter can be dealt with administratively by the parties and the High Court.

[20]   The appropriate costs decision is not necessarily straightforward. The applicants brought the proceedings seeking orders that the easement held by the respondents be extinguished, or alternatively requiring them to pay the full cost of upgrade. At the trial, the issue concerning the potential application of s 348 of the

8 At [82].

Local Government Act emerged, I am advised, largely at the initiative of the Court itself. As a further complication, as the High Court judgment recorded, prior to the trial the respondents made an offer to pay for 50 per cent of the cost of upgrading of the road.9

[21]   The starting point for costs is the unsuccessful party should be liable for costs to the successful party.10 Success on more limited terms is still generally regarded as success for this purpose.11 In Lawrence v Glynbrook 2001 Ltd, Brown J held:12

[8] … an assessment of which party was “successful” requires both a consideration of which party won the principal contests of law and fact and a realistic appraisal of the end result, rather than focusing on who initiated what step and the extent to which that step succeeded or failed.

[22]   Any reduction in costs is also regulated by the High Court Rules. A failure on a particular cause of action can result in a reduction of the award of costs under        r 14.7(d). Under r 14.7(f)(v), a failure to accept an offer in settlement without reasonable justification may reduce costs otherwise payable. In Cunningham v Butterfield, the Court of Appeal identified that costs were in the discretion of the Court, but that that should be exercised in accordance with the principles set by the applicable rules.13 In that case, the Court of Appeal did not interfere with the decision of the High Court that costs would lie where they fell given the measure of success on each side.

[23]   Standing back and assessing the present case it seems to me that, whilst the applicants did not succeed on their first cause of action, they did succeed on their second cause of action such that they are rightly regarded as the successful party. The offer to pay 50 per cent prior to trial is less than what was ultimately awarded. It would not be appropriate to award the respondents costs, or order that costs lie where they fell given that the applicants were successful. Nevertheless, a full award of costs in the applicants favour would not be appropriate given the extent to which the first cause of action was the main issue of fact and law in the case. In a minute of the trial Judge dated 5 June 2018 it was suggested that the applicants should receive a reduced

9      Kingsbeer v Okey, above n 1, at [48].

10     High Court Rules 2016, r 14.2(1)(a).

11     See, for example, Weaver v Auckland Council [2017] NZCA 330 at [26].

12     Lawrence v Glynbrook 2001 Ltd [2015] NZHC 1005 (footnotes omitted).

13     Cunningham v Butterfield [2014] NZCA 213, (2014) 22 PRNZ 521.

costs award in light of the 75 per cent recovery of its alternative claim. In my view, a costs award of 50 per cent of what would otherwise have been awarded is appropriate. The former costs award was for $43,931 plus disbursements of $16,744.76, totalling

$60,675.76. The applicants are entitled to 50 per cent of both amounts, being a total of $30,337.88.

[24]   The respondents sought the cost of the present application on the basis that it has been dismissed for lack of jurisdiction. I agree that that is appropriate. Even if the Court had had jurisdiction, I would not have made the orders sought — such orders would only be appropriate if the respondents fail to act reasonably in accordance with the process that has now been largely agreed before me.

[25]   Accordingly, the respondents are entitled to the costs of this interlocutory application on a 2B basis. I record that the application took one quarter day to argue for the basis of calculating these costs.

[26]In terms of the formal orders:

(a)the applicants’ interlocutory application is dismissed for want of jurisdiction;

(b)the respondents are awarded costs on that application on a 2B basis; and

(c)the applicants are awarded costs for the initial proceedings through to the completion of the trial, which are fixed in the amount of $30,337.88.

Cooke J

Solicitors:

Strachan O’Connor, Upper Hutt for the Applicants

Brittens Lawyers, Palmerston North for the Respondents